Kevin Brewer has a strange story. It is riddled with contradictions. He was the first person ever to have been convicted under the Companies Act 2006 for filing false company information. He was also a campaigner for beneficial ownership transparency. He falsely submitted that then Business Secretary Vince Cable was a shareholder in his company, in order to expose the defective legislation. He then flagged the issue, as well as the false information he provided, to the authorities, and was prosecuted as a result. For those interested in strategic communications and litigation, as we are, his story is catnip. A media stunt aimed at exposing how the law fails to tackle something – something which is very much liable to cause a public outcry – ended in unique legal proceedings, which, according to Mr Brewer, damaged his reputation. It’s a bit of a mess.
The first lesson to draw from Mr Brewer’s story is that in matters of shareholder transparency, you need to be ahead of the law. The court of public opinion judges opacity unfavourably before judges do. Convictions are rare but distrust is widespread. The Panama papers brought about media scandals: the Queen’s offshore investments, David Cameron’s Panama-based trust, Oxford and Cambridge’s investments in oil and gas. Icelandic PM Gunnlaugsson even stood down as a result of the outrage related to his hidden cash. Legally, however, very little happened.
NGO Global Witness published a report on beneficial ownership transparency in July 2018. The report focused on the UK, which is in this field very much a country of global significance: a financial hub with money tied to everywhere and anywhere, but also a regulated market integrated into a comparatively robust regulatory framework. Shareholder transparency in the UK casts a long shadow over the rest of the world, and as a result strategic communications in London fulfil a very particular function, in a jurisdiction upon which much hinges.
The UK in 2016 created the first fully open register of the real owners of its companies. Interestingly, this initiative has laid bare some more uncomfortable facts: more than 10,000 companies declare a foreign company as their beneficial owner which is unlikely to meet the register’s requirements – of these 72% are linked to “a secrecy jurisdiction” in Global Witness’ words. An interesting subversion of usual communications rules: coming clean yourself, before others do for you, is usually safer, but here the UK was going it alone.
This will not be the case for long, however, as the EU’s new anti-money laundering Directive requires such a register. Its deadline for implementing national legislation is 10 January 2020. Slowly but surely, the space between legal proceedings and a public outcry is being squeezed. It is prudent to look at these obligations in the broader context of reputation management: sometimes mere legal compliance is comms complacency.